Dear Mr. Tan,
My friend bought a Prulink product for himself many years back. The company paid the premium. He is the one of two directors and shareholders of this company. This insurance is purchased under the keyman policy. He is the insured person and the company is named as the owner of the policy.
Unfortunately, my friend met with an accident and is paralysed. The insurance paid out S$800,000. Cheque was issued to the company.
Should this money belong to the company or should it be paid to the insuree? Can this money be held at the company since it was paid by the company and was purhcased as a key-man policy? Or, can this money be construed as gratitous payment to be paid to the family member immediately?
REPLY
It depends on the agreement between your friend and the company. If the company took the policy and pays the premium, the company is the owner. The compnay has an insurable interest in the key man of the company, as the disability of the keyman can cause some loss of profit to the company.
If the company has an agreement with the keyman to pay the proceeds to the keyman or his family, then the payment should be made according to this agreement.
To take that argument a lot further, so since I am a stakeholder in this country called Singapore, and I think that LKY is a keyman here, so can I buy a big policy on his life and when something happens to him, the payout goes to me?
ReplyDeleteLOL... I guess your premium must be really really expensive.
ReplyDeleteWhat if you buy a huge policy on him and then put out a hit on him as well? ;)
ReplyDeleteBy the same token, no need to tell your beloved ones too much on how much you are insured... or some may get funny ideas *LOL*
So by the same token, the company that buys the policy for their keyman, when business bad, may take a hit on their keyman as well?
ReplyDeleteThat is the point of my illustration. Thanks for pointing it out.
Hahaha! It is the same in every instance. Just don't get caught =)
ReplyDeleteIt is the same applies to a personal life or accidental policy that your spouse, children and nominees might take a hit on the insured if money is the motivating factor even your love ones.
ReplyDeleteGreat Post! Thanks for sharing information about Key Man Insurance.
ReplyDelete